In today’s rapidly evolving transportation landscape, electric motorcycles are emerging as a viable option for companies looking to reduce their carbon footprint and enhance operational efficiency. While the primary focus often lies on electric cars, electric motorcycles offer unique benefits that can make them a worthy consideration for businesses. Here, we delve into the financial advantages, tax implications, and overall value proposition of investing in electric motorcycles for your company.
Financial Advantages of Electric Motorcycles
- Corporation Tax Relief: One of the most compelling reasons to invest in electric motorcycles is the corporation tax relief available. Companies can claim full corporation tax relief on the cost of purchasing the bike in the accounting period of purchase. This immediate deduction can significantly reduce the taxable profit, providing substantial savings for the business.
- Running Cost Deductions: Beyond the initial purchase, companies can also deduct the running costs of the electric motorcycle each year. This includes expenses such as maintenance, insurance, and electricity for charging. These deductions help lower the operational costs, making electric motorcycles an economically sound choice in the long run.
Tax Implications for Employees
While the benefits for companies are clear, it’s important to consider the tax implications for employees who use these bikes for personal purposes. The taxable benefit for the employee is calculated as 20% of the market value of the bike plus the costs of ‘fuel’ (electricity). Depending on their income level, employees will pay tax at rates of 20%, 40%, or 45% on this benefit.
For example, if an electric motorcycle has a market value of £10,000 and annual charging costs are £500, the taxable benefit would be 20% of £10,500, equating to £2,100. An employee in the 20% tax bracket would pay £420 per year in tax, whereas those in the 40% and 45% brackets would pay £840 and £945, respectively.
Employer Tax Charges
In addition to the personal tax implications for employees, employers are subject to a tax charge of 13.8% on the calculated taxable benefit. This additional cost should be factored into the overall financial assessment when considering the provision of electric motorcycles to employees.
Comparing Electric Motorcycles to Electric Cars
While electric motorcycles offer notable benefits, it’s important to compare them with electric cars to make an informed decision. Electric cars typically attract lower taxable benefits, making them more tax-efficient for both employees and employers. However, electric motorcycles can still be a smart choice for businesses looking to diversify their vehicle fleet, particularly for urban deliveries, quick commutes, and reducing parking costs.
Conclusion
Investing in electric motorcycles can provide significant financial benefits for companies through corporation tax relief and running cost deductions. However, it’s crucial to weigh these advantages against the tax implications for employees and the additional tax charges for employers. By carefully considering these factors, businesses can make an informed decision that aligns with their financial and environmental goals.
Electric motorcycles represent a forward-thinking investment that not only supports sustainability but also offers potential cost savings. As the market for electric vehicles continues to grow, staying informed about the latest developments and incentives will help your company stay ahead of the curve.
Frequently Asked Questions (FAQ)
What tax relief is available for companies purchasing electric motorcycles?
Companies can claim full corporation tax relief on the cost of purchasing the electric motorcycle in the accounting period of purchase. Additionally, running costs can be deducted each year.
How is the taxable benefit for employees calculated?
The taxable benefit is calculated as 20% of the market value of the bike plus the costs of ‘fuel’ (electricity). Employees pay tax on this benefit according to their income tax bracket.
What are the tax rates employees must pay on the benefit of using an electric motorcycle?
Employees will pay tax at rates of 20%, 40%, or 45% on the taxable benefit, depending on their income level.
Do employers have to pay additional taxes on providing electric motorcycles to employees?
Yes, employers must pay a tax charge of 13.8% on the calculated taxable benefit.
Are electric motorcycles more tax-efficient than electric cars?
Electric cars typically have lower taxable benefits, making them more tax-efficient. However, electric motorcycles still offer significant benefits and can be a smart choice for certain business needs.
Ready to explore the benefits of electric motorcycles for your business? Visit our Electric Motorbikes page to learn more and find the perfect model for your company’s needs. Embrace sustainability and efficiency today!
